A Bubble Interrupted?
Readers suggested a topic on the bubble question. “Is the final Housing Bubble correction underway now?”
A reply, “There are many people on this blog who believe we are entering another housing bust and a big drop in values. I submit we are simply still cleaning up the 2007 bust. There are always bumps in the road to busts and recoveries. The stats you see and quote today about increases in foreclosures, drops in prices, etc. Is likely a reverse dead cat bounce. The exuberance gain speed rapidly last year and simply had to slow down. The helium balloon bounced off the ceiling, if you will. The sky is not falling, market normalcy is returning and we will continue with the recovery off the deep bottom. There are signs everywhere of an improving economy.”
One said, “If we were where we are right now without any Fed intervention and FASB 157 I might believe you. As it is I do not believe you. I believe it’s a house of cards.”
I added, “I said long ago that it didn’t matter much if one views what’s going on as the same bubble or a new one. But I can see now that at this phase, understanding the difference of the two scenarios will be important. I have maintained it’s the same bubble. Prices never fell enough, or for long enough. Greed was not extinguished as it should have been, evidenced by how quickly market participants jumped back into speculation in housing.”
“How did this happen? We all know the answer; governments and central banks made huge interventions in markets and money supplies. It was a bubble interrupted. What we are told is that the current situation is not like 2000-pick your year. It can’t be another bubble because it doesn’t look like that time period. But if it’s the same bubble, what we should expect is an unraveling of the manipulations that interrupted the bubble and prevented it from running its course. IMO that more accurately describes what is happening now.”
One had this, “I see a few things: 1) Heavy government and central bank intervention, continuing to this day. 2) Large investor interest in housing. They’re not in it because all of a sudden they wanted to become landlords, because that’s just such a lucrative business. Right? I think they got in it to chase big returns, buying up assets from the government on the cheap (the public was barred in large measure) to sell for a higher price later on.”
“3) Eventually, as has happened in Britain, more people will be opposed to rising house prices. With the government and central bank heavily influencing much of this, I see then changes which will allow lower prices. On the other hand, politicians love their property taxes. 4) However TBTF banks have gotten yet bigger.”
“I see the FIRE sector more tightly consolidating control of politicians. Bottom line: The market is artificially being held up as of right now. The PTB are thinking, ‘We can hold this market as long as it takes.’ Can they? It’s unclear to me.”
And finally, “I say we are not in ‘normal’ range. The dip in 2008 was a dimple on a really big credit expansion lasting decades. The ‘trendline’ does not start in 2004. The Fed is pumping 1$Tr a year (that we know about) into the pig. With leverage (there is essentially no reserve requirement) what that adds to the money supply is probably $100Tr. There is good reason that desperate measures are taken to avoid any defaults anywhere in the world. A $Billion default would take $100Billion out of the system. It is too fragile.”
“The ‘tallest building in the world’ index is sky high. There are over 20 of these beasts finished in just the past 4 or 5 years. They are all but one outside the US. All places that would still be in the 15th century were it not for US consumer debt based spending. Last big crash it was just the Empire State Building.”
From CNBC. “It may seem like we’re still in the early innings of the housing recovery, but five years have already passed since the Obama administration launched its housing bailout. Now, the Home Affordable Modification Program is expiring. The program has come under fire for its high default rate. As of Dec. 31, 894,410 borrowers were still in active modifications. More than 306,000 redefaulted on the loans, according to a report last summer from the Special Inspector General of the Troubled Asset Relief Program.”
“Come this fall, about 30,000 borrowers will see their rates bump up 1 full percentage point. Their rates will then rise each year until they reach the current market rate, which now stands at 4.5 percent but is expected to rise over the next few years as hundreds of thousands more loans start to reset. ‘If we see this leading to much more hardship than we expect right now for homeowners, we’re going to be dynamic in our policy response. We’re not going to get behind the curve on this,’ said Tim Bowler, assistant Treasury secretary for financial stability.”
“‘This is something that is going to blindside a lot of people,’ said Bankrate.com’s Greg McBride, who initially argued that Treasury was just kicking the can down the road on the housing crisis. ‘This was ‘extend and pretend,’ no question about it. This was never designed to be something that solves the problems.’”
From Greenville Online. “Foreclosures rose sharply in the Greenville-Mauldin-Easley metropolitan area last month. South Carolina also had a 11 percent year-over-year increase in foreclosure starts after eight consecutive months of decreased foreclosure starts. It may be but a one month jump, said RealtyTrac VP Daren Blomquist, but it is cause for concern because the pattern was seen in other markets around the country.”
“Places like Florida saw a 39 percent jump in scheduled foreclosure auctions. New Jersey also saw a 39 percent increase in foreclosure auctions, which was its highest level since 2010. The increase in California was 57 percent. ‘There are certainly some markets that are still experiencing some pretty significant increases in different phases of foreclosure activity,’ he said.”
“It appears lenders are pushing through another batch of delayed foreclosures across the country that will be hitting the market, Blomquist said. ‘Everybody was talking about shadow inventory a couple of years ago, with the concern about these properties being delayed by lengthy foreclosure procedures that finally would come to and hit the market,’ Blomquist said. ‘I think what we’re seeing now is that there actually was some shadow inventory and it’s taking longer to come through and hit the market than maybe people expected,’ he said.”
“Housing Bubble correction underway now?”
This is the beginning of the 2nd leg down. There will be four legs down.
Why do you say there will be four legs down?
Four legs down = You need to be on all fours before the 1% can truly line up the target.
PTB modus operandi = construct legislation which benefits the wealthy, and sell it as a benefit for the masses.
There it is.
Can’t remember the name of the depression era chart that showed this.
It’s been posted here many times. There were multiple dead cat bounces until the bottom.
You may be referring to “Four Bad Bears by Doug Short.
Just take a ride around your neighborhood if you need to understand where this debacle is at. Furthermore, there is no shame in admitting you’re not paying your mortgage anymore thus more and more people are admitting it. Every week another person tells me directly or I overhear how “we have made a mortgage payment in years”.
Frankly, if you’re making payments on a house, you’re an idiot.
In that case I’m hoping the supply of idiots is limitless.
‘1 In 4 Americans Thinks The Sun Goes Around The Earth, Survey Says’
‘The stats you see and quote today about increases in foreclosures, drops in prices, etc. Is likely a reverse dead cat bounce. The exuberance gain speed rapidly last year and simply had to slow down. The helium balloon bounced off the ceiling’
I’ve said this a while back; what are the chances that giant increases in house prices, accompanied by flipping, artificially low interest rates (etc) will swoosh up to the perfect sweet spot of equilibrium, and gently settle at the permanent high plateau?
Well gosh, they didn’t. And it’s falling, speculators (including banks) are rushing to market, just when it appears prices have peaked. (This is the “sell high” part.) So the story now is the helium balloon is bouncing on the ceiling, certain to return to that ceiling and stay there.
So is this ceiling man-made? Acknowledged by experts, and written down in a book somewhere? Do the flippers know what a house is really worth? Or do they just want a profit?
There is no ceiling or floor except what is determined by a market free from distortion and subsidy. That is my main point; we haven’t seen what the houses are worth because the government and central banks interrupted the crash.
These double digit price increases should have been setting off alarm bells. Now, there are millions of new FB’s, on top of the millions sitting in shadow inventory and government bail-out loans.
It’s all good, as this sets the stage for another round of ‘Save Our Homes’ mortgage bailouts by the next permanent Democrat supermajority president elect Hillary Clinton.
Usually when I have a helium balloon it looks quite buoyant the night before, then I wake up in the morning and somehow it’s floating at ground level.
“Reverse deadcat bounce” is my favorite real estate pimp phrase ever.
“These double digit price increases should have been setting off alarm bells.”
They were, but they were bells of celebration. It was stunning to see the President of the United States himself openly cheer, on numerous occasions, about rising house prices which made its way into his speeches. This is the same guy who supposedly cares about the poor and disenfranchised. Nobody asked him how declining affordability helped those people, or the economy as a whole.
Yet the lying a$$hole was bemoaning about “inflated housing prices” while campaigning.
So the story now is the helium balloon is bouncing on the ceiling, certain to return to that ceiling and stay there.
I prefer to imagine the souffle bouncing on the ceiling…
All real estate is local just like the weather. Housing in Southern California is doing just fine. If you want to buy a house before houses rise 18-20% this year go ahead and buy a house with super low interest rate of under 4.5%.
Housing Analyst lost out on buying a home at the housing bottom of 2009.
He is a bitter renter.
I’ve helped some people buy houses the past few years. I can’t see anything out there right now that pencils out, or isn’t in a free fall market.
‘If you want to buy a house before houses rise 18-20% this year go ahead’
Are you buying houses in the inland empire? Why are you urging others to do so? You want the competition? You’ll never catch me telling people to buy anything that I want to buy.
“I can’t see anything out there right now that pencils out, or isn’t in a free fall market.”
BwaHahAhaAHHaAHAHAHAHAHAHAHAAAAAAAAAAAAAAA!!!!!!!!!!
Mr. Ben Jones “Are you buying houses in the inland empire? Why are you urging others to do so? You want the competition? You’ll never catch me telling people to buy anything that I want to buy.”
I bought all the houses that i wanted when housing was at the bottom in 2009. I don’t think people who are looking to buy a house should take HOUSING Analyst advice. The rental homes that i bought have increased between 150-175% since 2009. They are lower priced rental homes.If i would have listen to Housing Analyst in 2009 i would have missed on the housing bottom,when homes were basically free in many parts of the I.E. $50,000-$65,000 range
I don’t think the people on this site are real estate investors .They are probably looking to buy a home to live in higher price ranges and by the coast not in I.E.
‘people on this site are…probably looking to buy a home to live in’
That’s not the focus of this blog nor is it what interests me. Along the lines of the topic of this post, I am interested in the economic phenomenon. History will look back and see more than a buy-or-rent calculator here.
people on this site are…probably looking to buy a home to live in. That’s not the focus of this blog nor is it what interests me.
I agree. We’re not the focus, we’re the whippin’ donkey, for your entertainment. HEEEEGNH — HAWHRHWWW!
Buying at the height of the biggest housing bubble in history doesn’t get the ridicule it deserves.
http://www.anunews.net/blog/wp-content/uploads/2012/07/aa-foreclosure-highway-exit-sign-for-Foreclosure-good-one.jpg
“I bought all the houses that i wanted when housing was at the bottom in 2009. I don’t think people who are looking to buy a house should take HOUSING Analyst advice.”
Well, this isn’t 2009. HA stays some goofy things but is likely correct as far as “buying a house right now”. Great that you bought the dip, but we aren’t in one, at least not yet.
stays = says
You got a problem “Pete”. Spit it out.
“You got a problem “Pete”. Spit it out.”
That is my real name. What’s with the quotes around it?
Spit it out.
Simple liar. Housing was NOT at the bottom in the IE in 2009. And anywhere you got a house that low was and still is basically a slum. You cannot sell and you cannot collect rents to cover your outlays.
Ronnielemango”Simple liar. Housing was NOT at the bottom in the IE in 2009. And anywhere you got a house that low was and still is basically a slum. You cannot sell and you cannot collect rents to cover your outlays.
”
Housing was at the bottom in I.E. in Early 2009.It was 56% FORECLOSURE RATE. You could buy houses dirt cheap. I paid cash .I could hang on to the homes for 20 years and collect rent.I don’t care if the homes droped to 5 cent value.Im still collecting rent.
Well at least the rental income is offsetting some of your losses.
Remember…. Housing is a depreciating asset and a loss.
Instead of sitting around bored in a realtLiar office, why not learn a new skill to help cover your expenses? Maybe AutoMechanics 101.
If I were buying houses as investments, I would be telling everyone that prices were about to collapse.
Like that one here did with bonds. My hat’s off to him/her. That was brilliant!
That would be a great story if houses were an investment.
Houses are a loss as they depreciate rapidly
I have merely parroted what the MSM financial writers have told the masses about rising interest rates ever since the QE3 taper was first announced. I guess that makes me as brilliant as a parrot: “Polly want a mortgage?”
Right, “just parroting the analysts/media”. But all the while taking the other side of the trade, Goldman Sachs-style. That’s the way to play it, mate. Well done!
Don’t get mad at Megabank, Inc, get even, by beating them at their own game.
I bought all the houses that i wanted when housing was at the bottom in 2009
Well you are 50% ahead of where you were in 2009.
Not bad.
I am 1400% ahead of where I was in 2009 when I bought my company stock at $2 per share.
Stocks are always far better than real estate. Being a landlord is way not worth the stress and worry over renters kicking in your walls.
Too bad 2009 will eventually prove to have been a false bottom.
I thought at first that it was a gag account along the lines of AmyCroaks but he’s posted some things on here that make me think he’s serious.
We should all say a prayer for him, his future is bleak if tied to the IE.
Poor starving CA realtor transplant from GA.
We got us an angry lying realtor.
In other news, the sun is forecast to rise in the east once again tomorrow morning.
Why do Realtors have such poor grammar?
Realtors are liars.
“Remember Jerry, It’s not a lie is you believe it.”
Are you letting submerging market crisis fears stand in the way of reaping U.S. stock market investing gains?
Buy the dip. The stock market always goes up, in the long run.
Dividends are king - in tax deferred plans. Reinvest them.
Today’s Markets
Stocks Rise, Notching Year’s Best Week
S&P 500, Dow Industrials Gain 2.3% For Week
By Tomi Kilgore
Updated Feb. 14, 2014 4:37 p.m. ET
U.S. stocks posted broad gains Friday, as investors shrugged off mixed data to push the market to its biggest weekly rise of the year.
The Dow Jones Industrial Average climbed 126.80 points, or 0.8%, to 16154.39. For the week, the Dow advanced 360.31 points, or 2.3%, marking the best weekly performance since the week ended Dec. 20.
On Friday, the S&P 500 index rose 8.80 points, or 0.5%, to 1838.63 and the Nasdaq Composite Index advanced 3.35 points, or 0.1%, to 4244.03, the highest close since July 17, 2000.
After a swoon beginning in late January, stocks pushed higher over the past week despite a series of economic reports showing the U.S. economy started 2014 weaker than most had expected. While the economic data have shown softness in the jobs market, manufacturing and consumer spending, many investors have been shrugging off the data as at least somewhat depressed by bad weather.
The S&P 500 has advanced 2.3% this week, and 5.6% since closing at a nearly three-month low on Feb. 3, to trade just 0.5% shy of its Jan. 15 record high. The Nasdaq has climbed 5.8% in a seven-session winning streak, the longest such stretch since July 2013.
“The weather is muddying up the ability to analyze the true strength of the economy,” said Dan Veru, chief investment officer at Palisade Capital Management, which oversees about $5 billion. “Weather is the definition of a temporary event. The U.S. economy is growing. We might not like the pace of growth,” but momentum is gradually improving, he said.
Following new Federal Reserve Chairwoman Janet Yellen’s testimony to Congress this week, investors have been comforted to know that the Fed’s “policies of the past,” which have acted as a tailwind for stocks over the last several years, “are going to stay in place,” according to Mr. Veru.
…
There is no stock market only the Fed and big banks
gold and silver did better http://www.reuters.com/article/2014/02/14/markets-precious-idUSL3N0LJ39W20140214
Gold performed better than the S&P 500 the last three months.
My main concern is the shadow inventory - - how big, where is it located, and what levels of debt are the indentured slaves at.
Rising interest rates around the world are having an effect on US rates and that influence will continue. At what point in the rate climb will it snap the ability to repay current debtor’s backs?
Rates must be kept low indefinitely in order to ensure that today’s generation of home owners can sell to the next generation of buyers at ever-higher prices.
Whac
The USA is no longer influencing the interest rate on it’s own.
That Sea Change occurred recently and will continue because of the wash of money sloshing around the world.
Temecula, CA Housing Prices Crater 18%; Inventory Skyrockets 101%
http://www.movoto.com/temecula-ca/market-trends/
You might want to liquidate any housing that’s strapped around your neck. That is if you can find a buyer. Short sale is always an option too.
Comment by Housing Analyst
‘Temecula, CA Housing Prices Crater 18%; Inventory Skyrockets 101%”
Hosing prices in Temecula have gone up 3% “$16,000 in the last month. Housing prices will continue to increase in Temecula.
http://www.movoto.com/temecula-ca/market-trends/
awww…. our realtor still angry?
And monkeys will continue to fly out your butt.
Temecula Real Estate Trends & Statistics
Temecula Median List Price
February 2013 $521,224
February 2014 $462,065
One-year percentage decline
($462,065/$521,224-1)*100% = -11.4%.
Your point was…?
You are cherry picking for a favorable stat. Take that graph and click on the 2 yr or 5 yr view. There was a brief spike in late 2012/early 2013. Other than that prices appear to have dipped seasonally this Winter. The decline is no where near 20% and this Spring will likely bring prices slightly higher and back on the trend line. It’s a shame you guys all missed out on the opportunity that was at your feet. You had a front row seat to see and exploit it. Personally, I got in and out of the market using leverage the stock market does not afford. My kids college funds are Stanford tuition deep and I hung onto a few of the better units in North Park (San Diego) as rentals. Rant all you want but you missed the boat. Hopefully, you will see it next time we go through our inevitable boom and bust cycle. FWIW, that bust is no where in sight so save your pennies.
‘you guys all missed out on the opportunity’
Oh, look, another one.
Many of us are still making money off of moves we made the past few years. And I will again. So enough of this, “I’m the only one to profit” crap. You weren’t.
I love watching lying realtors panic while holding melting ice cubes as the temperature rises.
I’m perfectly happy to have a diversified asset portfolio which doesn’t include housing, which clearly was artificially propped up beyond fundamental value by Fed and federal government price support measures.
If you believe these price support measures will be in place and successful forevermore, then nobody is stopping you from betting the ranch on real estate. Just don’t tell me that my choice to avoid it like the plague is foolish, when you are gambling recklessly on the misguided belief that real estate always goes up, especially when the only reason it has recently gone up is due to extraordinary and (likely) temporary intervention.
Justsomeguy = nobody.
If this trend continues, my wife and I may be looking towards Temecula in a few years as an affordable retirement alternative compared to unaffordably priced San Diego. Luckily we are renting, so won’t have to worry about unloading an underwater home before relocating at some future point.
California foreclosures are up 57 percent YOY? Wow:
The impact of that is still being felt. “The foreclosure rebound pattern is not only showing up in judicial states like New Jersey, where foreclosure activity reached a 40-month high in January, but also some non-judicial states, like California, where foreclosure starts jumped 57 percent from a year ago, following 17 consecutive months of annual decreases,” Blomquist said.
http://www.upi.com/Business_News/2014/02/13/January-has-a-post-holiday-foreclosure-spike/UPI-60781392303367/
Look, we know that after mark-to-market was suspended, banks have every reason to let foreclosures slide. Letting people live in the houses for free meant that the houses were kept up. It was extra cash that was being pumped into the economy when incipient foreclosees are living rent-free. So there’s every incentive to keep foreclosures off the market. The government has done its best to try to keep foreclosures off the market by limiting sales directly to investors.
Unintended consequences - as prices start going up, there’s a big incentive to start clearing out the pipeline. Well… I won’t say unintended, it’s “inconsequential”, as TT Geithner put have it - their concern is “foaming the runway for the banks.” What happens to the foreclosees is not of particular concern.
Also… as I posted in the Bits Bucket for today - combine the actual inflation increase since 2008, the drop in wages, the drop in labor force participation, the rise in rents, the rise in house prices… perhaps the net result might be an unintended consequence for the PTB. But only if it results in mucking out Congress. We’ll see.
but also some non-judicial states, like California, where foreclosure starts jumped 57 percent from a year ago, following 17 consecutive months of annual decreases,” Blomquist said.
RW, any comment on this? What would explain the CA rate jumping like this? You had argued fairly convincingly that the pig was leaving the python in non-judicial states over the last year and a half…
lol…looks like I responded just as you commented…see below.
http://www.propertyradar.com/trends/california
Recognizing that the foreclosures as measured in the article is likely different than what Property Radar measures, Property Radar reported a 53% increase in NODs in California. A similar “wow” number.
HOWEVER, January 2013 was artificially low as the Homeowner Bill of Rights just started.
The monthly average for NODs for 2013 was 7,814 for California (per Property Radar). The NOD # for January 2014 was 7,417.
Unremarkable.
Keep your eye on the number of non-current borrowers in the state (which would be a precursor to a spike in foreclosures). Per LPS (now a new name, Black Knight Financial Services–terrible name, IMHO), CA’s non-current loan rate as of December 2013 was 5.4% (8th LOWEST in the country).
Again, if there was to be a spike in foreclosures in the state, you would first see a spike in delinquencies…that hasn’t happened.
The delinquencies already occurred and the foreclosure sat as a result of the moratorium.
Slithery one.
Non-current loan rates include all of the above (30-day delinquencies, 90+ day delinquencies, and homes in the foreclosure process).
And the defaulted mortgagor isn’t counted as a result of the moratorium.
There you go, making up sh*t again.
If the defaulted mortgagor isn’t counted, then the 5.4% number would be far lower…5.4% is made up 0.9% as homes in the foreclosure process, and about 4.5% at some stage of delinquency.
If there was a moratorium, then Property Radar wouldn’t show 1,800 homes being foreclosed on by the banks in January 2014.
I think it’s you here with the agenda my friend. The defaulted mortgagor isn’t counted nor would it reflect in the 5.4% number because these mortgagors are set aside.
Porperty Radar merely shows the number of delinquencies and defaults that will ultimately be captured by the moratorium. It’s worked that way all along and that is where the 4.4 million excess, empty and defaulted houses are held.
Property Radar gets their data from public records.
LPS (or the company formerly known as LPS) gets their data since they are the servicer of a large percentage of all mortgages and know who is (and who is not) delinquent.
Your 4.4MM homes is a ludicrous number in light of 38 million residents and about 14MM housing units (a large number of which are rentals).
Your “moratorium” speak is a complete lie.
I didn’t ask you to substantiate Property Radars credibility but it might help your own if you address the topic.
The 4.4 million excess, empty houses is a reality… just like CA’s foreclosure moratorium that the blog owner recently school you on.
Carry on fraudster.
“Eventually, as has happened in Britain, more people will be opposed to rising house prices.”
Very important point, right there! Once the masses realize that ever-rising house prices are the reason their kids are priced out of home ownership, or that many of the primary beneficiaries of the Fed’s housing price reflation program were foreign nationals who could come in and snap up U.S. residential real estate while Main Street America was collectively on its back, the political support for housing price ’stabilization’ programs may give way to widespread resentment against government-sponsored housing price support programs.
At that point, watch out below…
Some of us already do resent it, along with the taxpayer liability! Great plan, sign my kids up for a lifetime of higher taxes and out of reach housing.
Chinese investors’ real estate wealth gains are our kids’ lost opportunity to buy affordable housing.
Was it part of the Fed’s plan to hand over buckets of helicopter-dropped monies to Chinese real estate investors?
Neither side mattered on their own. Which side was with the bankers?
+1 A banker will wrap themselves in anyone’s flag.
Given that more people own houses or mortgages than don’t, I fail to believe this will ever happen. Greed comes before children.
Market forces suggest otherwise. Time will tell.
Once the masses realize
I fear that you give the masses far too much credit; personally, I am doubtful that they will ever realize that ever-higher housing prices is not a good thing.
“I am doubtful that they will ever realize that ever-higher _______ prices is not a good thing.”
And thus the existence of the Fed’s “price stability” equaling 2% inflation will persist.
And so will collapsing demand.
Bubbles in the real estate arena are more critical than that of a stock market. It can be a primary cause for financial crisis. Then how can this be prevented?
http://www.keepingcurrentmatters.com/wp-content/uploads/2012/05/Underwater1.jpg
Don’t blow bubbles.
• Institute a guiding principle that the costs and benefits of financial transactions be limited to the participants of the transaction.
• Limit “financial pollution” wherein costs from botched financial transactions are imposed on the public.
• Aggressively seek to end the “privatize the profits, socialize the losses” model common in finance.
• John Kenneth Galbraith said, “All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment.”
• The most curious component of the financial crisis was discovering lenders making loans that they didn’t care about having repaid. These creates a massive perverse incentive to create bad debt. Bad debt was the core of the financial crisis. So, lenders must be forced to retain repayment risk. They will - and have - howled, and will call in every political favor they’ve paid for. And thus far, it’s worked. There are no provisions that force lenders to retain repayment risk. The core cause of the financial crisis has not been remediated.
• “Speaking last week at a conference organized by the Clearing House, a group of large banks, he [Barney Frank] noted that until the 1980s risk retention was common for home mortgages. Banks made loans and kept them on their balance sheets, just as they did other types of loans. The securitization revolution changed that, and now the banks like the idea of collecting fees without risking their own capital. ” - ibid, second page of link.
• A big opposing force is that politicians are in a state of regulatory capture by the financial sector. They shake down the big donors and the big donors thus gain more control over them. Eventually they merge.
• Opposing that are deteriorating financial conditions for ever larger segments of the population, due to government inaction and central bank primary focus on keeping Wall Street profitable.
Well said Neuromance. Good points all.
Ben, fantastic choice for a thread. One of my takeaways it that many people have many different choices for their investments which are valid. Bill has his stocks, but rents housing because he has to be mobile. HA likes stocks because he believes housing “always depreciates”, so he prefers to rent. IELandlord loves his Riverside shanties and at $50,000/unit, he must get tremendous cash flow and likely has appreciation. Whac likes the safety of his bond funds and is unlikely to ever buy something because he lives in a very high cost area.
Rental Watch makes his living building housing and seems to have a good grasp of the market fundamentals. BTW, RW should not get the abuse he receives here….home builders should be the best friend of people looking for affordable housing…such affordable housing will more likely happen if more supply is built.
I like housing because I understand it and over my lifetime it has historically been a great investment for me and for my parents too. I can manage it well. I bought real estate in 2008,9 & 10 because the prices came down to a metric that worked for me. I could buy houses for $250,000 to $300,000 which rented for $25,000 to $30,000 per year. The metric was a purchase price of 10X’s the annual rent. That only happens every 10-20 years and so I made the decision to buy.
The fact that housing appreciated 30% since I made my purchases is a nice bonus to the cash flow. The fact housing appreciation has stagnated in some areas and slid down a bit in others is almost inconsequential, as I am already using the “house’s” money (look, I made a pun).
All that being said, the beauty of this blog is that there are lots of diverse views and they serve to remind each of us that no one really knows where the market is going. I was sure interest rates would increase in early 2014, and they dropped 25 basis points (8% drop). I find the situation in China fascinating and it could become a Black Swan event for the world, just as it was with US Subprime in 2008.
Keep up the good work. I have enjoyed this blog (other then HA’s juvenile & repetitive diatribe) for almost a decade now and I look forward to the next decade of discourse on the market.
No my friend. Housing depreciates just like all man made and manufactured items.
You’re going to experience that in a very painful way but it will be a good lesson for you.